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Government Contractor Compliance & Regulatory Update

BREAKING NEWS:  FAR Council Issues Final Rule and DOL Issues Final Guidance on Fair Pay and Safe Workplaces (“Blacklisting”) Executive Order, Effective October 25, 2016

Posted in Department of Labor, Federal Acquisitions, Labor Law

Today, the Federal Acquisition Regulations Council (“FAR Council”) and the U.S. Department of Labor (“DOL”) issued its Final Rule and Guidance implementing the Fair Pay and Safe Workplaces Executive Order (the “Order”), commonly referred to as the “blacklisting” rule.  In total, the Final Rule, Guidance, and accompanying commentary totaled nearly 900 pages, responding to nearly 20,000 comments on the Proposed Rule and Guidance released earlier this year.  Some of our previous blog posts on the Order and the Proposed Rule and Guidance can be found here and here.  This post will highlight the notable changes and clarifications made in the Final Rule and Guidance as well as key takeaways for federal government contractors.

Effective Date

The Final Rule is effective on October 25, 2016.  This is earlier than anticipated and dramatically shortens the time for contractors to prepare to comply with the Order and its implementing regulations.  That being said, as discussed below, the Final Rule also phases in a number of the disclosure and compliance obligations, lessening the initial burden of the implementation.

Phase-In of Labor Violation Disclosure Requirements

One of the overarching concerns raised during the notice and comment period was the enormous burden the Order would place on the contracting community.  In an effort to lessen that burden, the Final Rule and Guidance announced a phased implementation of the disclosure obligations.  The phase-in has two key components.

First, the Order and the Proposed Rule contain a three-year look back for covered violations.  Recognizing that contractors have not been cataloging covered labor violations prior to the issuance of the Order, the Final Rule only requires contractors to look back one year for reportable violations when the rule becomes effective.  The look-back period will increase each year by one year until October 2018, when it will become a three-year look back.

Second, the Final Rule also limits which contractors must make labor law violation disclosures in the first six months following the effective date.  Contractors will not be required to disclose labor law violations until April 24, 2017, unless the contractor is responding to a solicitation for a contract valued at $50 million or more after the effective date of the Final Rule.  For most contractors, this provides an additional six-month window to prepare for the implementation of the disclosure obligations.

The phase-in of disclosure obligations does not just impact prime contractors.  The Final Rule also included a lengthier phase-in for subcontractor disclosure obligations.  Subcontractors must begin disclosing labor violations for solicitations issued after October 25, 2017, one year after the effective date.

A Pause on The Disclosure of “State Law Equivalent” Violations

When the Proposed Rule was released, the Proposed Guidance stated that a supplement would follow containing a list of which state-law equivalents for the 14 enumerated federal laws require disclosures of violations under the Order.  To date, no list has been released.  The Final Rule and Guidance acknowledge this and state that the DOL will release a comprehensive list of state laws that are covered by the Order.  This listing will be subject to notice and comment before it becomes effective.  In the meantime, only the 14 federal labor laws listed in the Proposed Rule and in the Order, along with state OSHA plans, are covered by the rule.

Minor Clarifications on Scope of Violations

Overall, despite numerous comments and criticisms, the DOL declined to substantively modify its list of covered labor violations in the Final Guidance.  Thus, the list of administrative merits determinations, arbitral awards, and civil judgments remain exceptionally broad and sweeping.

Although the DOL declined to narrow its definition of a violation, the Final Guidance does contain some minor modifications that broaden the definition of a violation.  For example, the definition of administrative merits determination in the Proposed Guidance did not include violations of the anti-retaliation provisions of the Occupational Safety and Health Act (“OSHA”) or the Fair Labor Standards Act (“FLSA”).  The final rule clarifies that these were unintentionally omitted from the Proposed Guidance and are now included in the Final Guidance.  Additionally, the Proposed Guidance limited “determination letters” from the DOL Wage and Hour Division to letters outlining violations of Sections 6 and 7 of the FLSA (minimum wage and overtime).  In the Final Guidance, the DOL has clarified that this was unintentionally narrow, and that the Final Guidance includes determination letters finding any FLSA violation.

Assessing A Subcontractor’s Responsibility – Removing The Burden From The Prime

One highly controversial aspect of the Proposed Rule was the burden placed on the prime contractor to perform the same type of responsibility determination of covered subcontractors’ labor violations that the government will perform on prime contractors.  In response to numerous comments, the Final Rule has modified the process for assessing a subcontractor’s violations, largely removing the burden from the prime contractor.

Instead, starting October 25, 2017, under the Final Rule, covered subcontractors will submit their list of labor violations to the Agency Labor Compliance Advisor (“ALCA”).  The ALCA will then perform an assessment of the disclosed violations and make a recommendation.  The prime contractor must make the ultimate decision as to responsibility.  If the subcontractor disagrees with the finding of the ALCA, it can raise the dispute with the prime contractor.

Clarification of Assessment Process of The Labor Compliance Advisors

The Proposed Rule and Guidance introduced a new government official into the contracting process, the ALCA.  There was substantial controversy surrounding this new role, particularly the potential disparate application of the Order between agencies and perhaps even within agencies.  The Final Rule and Guidance provides additional details regarding the process by which federal agencies and departments will assess a contractor’s labor violations.  Moreover, the Final Rule and Guidance recognizes the need for guidelines and training for the ALCAs.

The Final Rule and Guidance states that the ALCA will have three days to assess labor violations disclosed by a contractor.  Although the contracting officer is permitted to give the ALCA additional time, the contracting officer may make his or her own assessment of responsibility without the recommendation of the ALCA.  The ultimate responsibility for making a responsibility determination will remain with the contracting officer, not the ALCA.  The ALCA’s role is to “assesses the nature of the violations and provide[] analysis and advice.”

The Final Guidance also clarifies the process the ALCA will follow during his or her assessment.  The ALCA will first review all of the violations to determine if any are “serious, repeated, willful, and/or pervasive.”  Then, the ALCA “weighs any serious, repeated, willful, and/or pervasive violations in light of the totality of the circumstances, including the severity of the violation(s), the size of the contractor, and any mitigating factors that are present.”  Finally, the ALCA provides written analysis to the contracting officer.

Public Dissemination of Disclosures

The Proposed Rule and Guidance noted that information submitted to the contracting agency would be publicly disseminated.  Despite numerous comments criticizing this proposed provision, the Final Rule and Guidance declined to remove this requirement.  However, the Final Rule and Guidance provided clarification as to how this public dissemination will work in practice.  Pursuant to the Final Rule, the following information will be publicly disclosed based upon the contractor’s violation submissions:  (1) the law violated; (2) the case identification number or docket number; (3) the date of the decision finding a violation; and (4) the name of the body issuing the judgment.

The contractor will input this information into the System for Award Management (“SAM”).  From SAM, the information will be made available to the public through the Federal Awardee Performance and Integrity Information System (“FAPIIS”).  The Final Rule clarified that while the four enumerated data points must be made public, the contractor has the choice as to whether any additional documents provided by the contractor to demonstrate its responsibility and mitigation efforts shall be made public.

Key Takeaways

With the Final Rules and Guidance published, it is more important than ever that contractors begin preparing for the implementation of the Order and its regulations.  Contractors have two months before the effective date of the Final Rule, and while certain obligations will be phased-in, contractors will need time to prepare for compliance.

Contractors should start cataloging any violations during the past six months that constitute covered violations as well as any evidence of mitigation efforts taken as a consequence of the violations.  Because complaints and charges alleging violations of the 14 federal laws covered by the Order, a central official of office should be designated to coordinate the collection of this information (concerning both past and future violations) and a central repository for it.  Contractors should view the ability quickly to provide a comprehensive list to the contracting officer as a competitive advantage, as competitors may not be prepared to do so in a timely manner.

Additionally, if the ALCA makes an inquiry concerning the disclosed violations, contractors should be prepared to advocate, with appropriate evidence, why certain violations are not willful, repeated, pervasive or severe.  For instance, the contractor could point to its size or the number of employees in the organization.  It can also identify measures taken by the contractor to address the issues raised in the violation.  It will be important that these disclosures be vetted by a central authority within the organization.

In addition to preparing to report labor violations, contractors should also work internally to reduce and mitigate the risk of future violations.  This can be achieved by: (1) developing and implementing effective policies and training; (2) auditing compliance; (3) adopting a robust internal complaint mechanism; (4) developing alternative dispute resolution processes; and (5) undertaking early case assessment and management.  Taking these proactive measures can help lessen the impact of future compliance by reducing the number of violations that must be reported.

Webinar On The Final Rule and Guidance

Proskauer is hosting a webinar to discuss the Final Rule, practical implications of the Final Rule and what contractors should do to prepare for the Final Rule going into effect.  The webinar is scheduled for September 13, 2016 at 1:00 p.m. EST.  To register for the webinar, click here.

BREAKING: FAR Council Publishes Final Rule On Fair Pay and Safe Workplaces (“Blacklisting”) Executive Order

Posted in Federal Acquisitions, Labor Law

Today, the Federal Acquisition Regulation Council (“FAR Council”) published the final rule regarding the Fair Pay and Safe Workplaces Executive Order (the “Order”), better known as the “blacklisting” rule.  The Order imposes a host of new obligations on government contractors with more than $500,000 in government contracts, including an obligation to report various labor law violations during the bid and proposal process, new pay transparency obligations, and restrictions on arbitration provisions.  We are currently in the process of reviewing the final rule, which including commentary is more than 500-pages, and will publish a substantive post shortly discussing the changes from the proposed rule, as well as what contractors need to know to prepare for the implementation of the rule.  In addition, you can sign up for our webinar here, which takes place on September 13, 2016 at 1:00 p.m. EST.

Proskauer Attends And Presents At The Industry Liaison Group’s National Conference

Posted in Labor Law, OFCCP

From August 3-5, the Industry Liaison Group, a community of government contractors and members of the government contractor community, held its National Conference in Charlotte, North Carolina. The event featured various speakers on a multitude of topics, including pay equity and achieving equality in the workplace. Proskauer attorneys Connie Bertram, Guy Brenner, and Alex Weinstein attended the event.

On Friday, August 5, 2016, Connie Bertram and Guy Brenner presented to a packed room on the Fair Pay and Safe Workplaces Executive Order (the “Order”), better known as the Blacklisting rule. Some of our previous posts on the Order include: President Obama Signs Executive Order Addressing Contractors’ Employment and Labor PracticesProposed Regulations For The Fair Pay And Safe Workplaces Released and NLRB Takes Steps To Facilitate Sharing Of Federal Contractor Labor Law Violations. As a reminder, the Order imposes a host of new obligations on government contractors with more than $500,000 in government contracts, including an obligation to report various labor law violations during the bid and proposal process, new pay transparency obligations, and restrictions on arbitration provisions.

Connie and Guy_ILG

Connie’s and Guy’s presentation provided an overview of the various new requirements stemming from the Order and its proposed implementing regulations. The final rule is expected this month. The presentation not only provided contractors with an overview of the requirements of the Order and the proposed regulations, but also provided practical guidance regarding the impact of the regulations and what contractors can do now to prepare for the new requirements.

Connie and Guy_ILG_2The participants who attended the presentation were engaged and asked compelling questions throughout the program. The myriad of questions from the audience only further demonstrated the burden and expense that is expected to accompany the Order, as well as the confusion in the contractor community about the breadth and reach of the Order. That being said, as Connie and Guy explained to the participants, while the Order will be burdensome, with proper focus and assistance the requirements can be managed and even used to provide diligent government contractors with a competitive advantage in marketplace.

You can be sure that when the final regulations are issued we will provide a detailed analysis for our loyal blog readers. Stay tuned.

New Sex Discrimination Guidelines Take Effect August 15, 2016

Posted in Discrimination, OFCCP

We have previously written about the updated sex discrimination guidelines recently published by OFCCP. Among other mandates, the guidelines require federal government contractors to provide paternity leave on an equal basis to maternity leave.  The guidelines also prohibit discrimination based on gender identity and sex-based stereotypes, such as whether an individual dresses in conformity with their gender.

These guidelines take effect Monday, August 15, 2016. Before then, federal government contractors should review their employee handbooks and policies to make certain they are non-discriminatory and gender-neutral.  Federal government contractors should also revise their training programs to explicitly address the more subtle forms of discrimination described by OFCCP.

NLRB Takes Steps To Facilitate Sharing Of Federal Contractor Labor Law Violations In Anticipation Of The Final Fair Pay And Safe Workplaces (a.k.a “Blacklisting”) Rules

Posted in Labor Law, OFCCP

In a July 1, 2016 memorandum (OM 16-23), the Office of the General Counsel for the National Labor Relations Board (“NLRB”) announced that it was beginning to take steps to comply with the Fair Pay and Safe Workplaces Executive Order (the “Order”) – the regulations for which have not yet been finalized.  The Order imposes a host of new obligations on government contractors with more than $500,000 in government contracts, including an obligation to report various labor law violations during the bid and proposal process.  Some of our prior posts on the Order and the proposed implementing regulations can be found here and here.

One of the internal government obligations imposed by the Order is that administrative agencies make information concerning labor law violations accessible to other agencies.  The memorandum addresses the NLRB’s efforts to ensure that fellow federal agencies have access to administrative determinations issued by the NLRB which may be covered by the Order.  In order to ensure that the information can be shared across databases, the NLRB has created a new form, which will request certain information from “charged party employers” in NLRB actions.  For example, the new form requests the employer’s:  Commercial and Government Entity (“CAGE”) number; Data Universal Number System (“DUNS”) number; DUNS number suffix; and the Employer Identification Number (“EIN”) or Taxpayer Identification Number (“TIN”).  These are fields compatible with existing government contracting systems which will facilitate the sharing of violation information.

Attached to the memorandum is language (OM 16-23, Attachment 2) that will be sent to charged party employers to aid in the collection of the information whenever a decision is made by a Region to issue a complaint.  The language informs the charged party employer of the NLRB’s obligation to provide certain information to other agencies and then states that “if you reach a resolution of this matter before the Region issues a complaint, such as by entering a pre-complaint informal settlement agreement with the Regional Director, no information on this case will be forwarded to this database.”  The email makes clear that in the absence of a settlement, “[t]he information you provide will be forwarded to the database accessed by Labor Compliance Advisors in making their decisions regarding contracting, … if the Regional Director issues a complaint in this matter.”

The language goes on to state that if a complaint is issued and the charged party employer fails to provide the requested information, not only will the agency send the information it has to other federal agencies, but it will also notify the other federal agencies of the contractor’s refusal to provide the information, which “may be considered by the Labor Compliance Advisors in assessing whether the charged party employer will be eligible to contract with the federal government.”

It is noteworthy that the NLRB is beginning to take steps to implement the Order even though the final implementing regulations have yet to be published.  The final rule is expected to be published in August 2016.  This action by the NLRB suggests that the Administration remains fully committed to the Order and that government contractors should expect the final rules to be published in the near future.

Contractors should continue to prepare for the implementation of the Order and its corresponding regulations.  This should include undertaking comprehensive compliance audits to ensure compliance with the labor and employment laws subject to the Order as well as compiling a list of covered violations that must be reported pursuant to the Order.  For more information on preparing for the implementation of the Order, see our prior post.

OFCCP Renews Compliance Investigation Scheduling Letter

Posted in OFCCP

On July 1, 2016, the Office of Federal Contractor Compliance Programs (“OFCCP”) announced that it had renewed its Scheduling Letter and Itemized Listing for use during compliance investigations.  The renewal lasts for three years.  In announcing the renewal, the OFCCP noted that it made certain “clarifying edits,” designed to “ensure contractors understand the information being requested and to strengthen the agency’s assurances of confidentiality for the information provided.”

Most of the changes to the scheduling letter are not substantive.  However, the new letter contains a notable change regarding OFCCP’s treatment of information provided by contractors to the agency during compliance reviews.

The prior scheduling letter described the agency’s view that the information requested was “sensitive and confidential” and would be treated as such.  However, in the renewed letter, the OFCCP removed this language, stating instead that the OFCCP “may use the information you provide during a compliance evaluation in an enforcement action.  We may also share that information with other enforcement agencies within DOL, as well as with other federal civil rights enforcement agencies with which we have information sharing agreements.  Finally, the public may seek disclosure of the information you provide during a compliance evaluation.”

OFCCP Settles Sex Discrimination Claims With Mental Health Provider

Posted in Discrimination, OFCCP

The Office of Federal Contractor Compliance Programs (“OFCCP”) recently settled a case involving allegations of gender discrimination with federal contractor, Integris Mental Health (“Integris”).  As part of the settlement, OFCCP and Integris entered into a conciliation agreement, governing the terms of the settlement.

OFCCP found that Integris “discriminated against female applicants for occasional, part-time Mental Health Worker positions,” over a two year period.  This “pattern or practice of discrimination” impacted 439 female applicants.  Additionally, OFCCP determined that Integris “discriminated against female applicants for full-time Mental Health Worker positions” over a two year period.  This “pattern or practice of discrimination” impacted 53 female applicants.

While the conciliation agreement expressly states that Integris does not admit to committing these violations, Integris has agreed to pay members of the class of 492 female applicants (the “class members”) a total of $232,690.50.  In addition, the conciliation agreement requires Integris to engage in efforts to hire 13 class members as positions become available, but not more than one year after the conciliation agreement’s effective date.  Moreover, the conciliation agreement obligates Integris to immediately cease using its current hiring practices and to implement revised hiring practices within 30 days.

This settlement should serve as a reminder that contractors must consistently monitor compliance with OFCCP regulations.  OFCCP is actively searching for discrimination in the hiring practices of contractors, so contractors should be vigilant in reviewing and, if necessary, revising their recruiting and hiring practices to ensure that equal opportunity is afforded to all candidates.  As part of this process, contractors should conduct a privileged audit on an annual basis to assess whether their hiring data reflects any statistical significant disparities in the hiring of protected groups and, if so, explore the basis for those disparities.

OFCCP Announces New Veteran Hiring Benchmark

Posted in OFCCP, Veterans

Yesterday, OFCCP announced its 2016 Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) Benchmark. The new benchmark is 6.9%, slightly lower than the previous year’s 7% benchmark.

The VEVRAA Benchmark is the figure which federal contractors must use to assess the effectiveness of their outreach programs for the hiring of veterans. Contractors may either use the OFCCP’s national benchmark, or establish their own benchmark using applicable statistics and other metrics set forth in OFCCP’s regulations (41 CFR §60-300.45(b)(2)).

OFCCP Publishes Final Rule Modernizing Sex Discrimination Guidelines

Posted in Discrimination, OFCCP

For the first time in more than four decades, OFCCP revised its Sex Discrimination Guidelines prohibiting discrimination by government contractors on the basis of sex (the “final rule”). The final rule applies to employers with Federal contracts or subcontracts totaling $10,000 or more over a 12-month period.  The final rule outlines sex-based discriminatory practices that contractors must identify and eliminate.  It also clarifies how contractors must take affirmative action to ensure their hiring and employment practices do not adversely affect employees on the basis of sex.

The final rule broadly covers issues of sex discrimination in the modern workplace, essentially bundling together in one rule a collection of legal issues – some settled and some sharply divided – covered by Title VII, the Pregnancy Discrimination Act, the Equal Pay Act and various EEOC and OFCCP pronouncements. Below, we highlight some of the issues raised by the rule and “best practices” Federal contractors should consider.  The final rule takes effect August 15, 2016.

Background

OFCCP is charged with enforcing Executive Order 11246, which prohibits discrimination by contractors on the basis of race, color, religion, sex, sexual orientation, gender identity, or national origin. The Executive Order also requires covered Federal contractors to take affirmative action to recruit, hire, train and retain qualified applicants and employees in these protected categories.

In 1970, OFCCP promulgated its Sex Discrimination Guidelines. Those guidelines have not been substantively updated since they were first promulgated.  Of course, the law regarding sex discrimination in the workplace has changed drastically since 1970.  As a result, OFCCP revised the guidelines to align them with developments in nondiscrimination law.  OFCCP has taken the position that the revised guidelines, published in the final rule, do little to change the obligations of covered employers.  OFCCP sees this final rule merely as a statement of the current law applicable to contemporary workplace issues.

General Prohibitions

Broadly speaking, the final rule prohibits discrimination against any employee or applicant for employment because of sex. The final rule defines “sex discrimination” broadly to include discrimination on the bases of pregnancy, childbirth, related medical conditions, gender identity, transgender status, and sex stereotyping.  The final rule gives particular examples of unlawful sex-based discriminatory practices.  For example, the adverse treatment of unmarried women, but not unmarried men, who become parents is prohibited.  Similarly, imposing any differences in retirement age or other terms, conditions or privileges of retirement on the basis of sex, or restricting job classifications on the basis of sex are unlawful acts of discrimination.

Protection for Gender Identity and Trans-Gender Individuals

The final rule prohibits discrimination based on an individual’s gender identity or transgender status. For example, the final rule prohibits denying transgender employees access to restrooms and other facilities designated for use by the gender with which they identify.  The final rule also prohibits treating employees or applicants adversely because they have received, are receiving, or will receive transition-related medical services.  OFCCP is clear that the prohibitions against discrimination based on sex, including gender identity or transgender status, also protect applicants and employees who identify as neither male nor female.

In the section of the final rule that requires employers to allow applicants and employees to use the restroom of the gender with which they identify, OFCCP confronted the concern that such a requirement would impact other employees’ privacy expectations:

To begin with, this [submitted] comment [raising concerns about employees’ expectation of privacy] assumes that non-transgender employees will react to the presence of transgender employees based on the transgender employees’ birth-assigned gender, rather than on the gender with which they identify in their daily interactions with co-workers. It also assumes that non-transgender employees’ reactions will be based on fear, ignorance, or prejudice about transgender individuals.  It is well established that private bias, prejudice, or fear is not a legitimate basis for retaining the status quo.  Non-transgender co-workers’ fears, ignorance, or prejudice about transgender individuals can no more be permitted to trump the right of transgender employees to equal workplace treatment than white co-workers’ prejudices against sharing restrooms or drinking fountains with black employees would have been permitted to trump black employees rights after [certain civil rights laws] went into effect 50 years ago.[1]

OFCCP declined to include in the final rule an explicit provision making it an unlawful employment practice to offer health insurance that excludes coverage for all health services associated with gender dysphoria or gender transition. Even so, OFCCP states that such categorical exclusions would likely violate prohibitions on both sex and gender identity discrimination because they single out services and treatments for individuals on the basis of their gender identity or transgender status.

Discrimination Based On Sex-Based Stereotyping Is Prohibited

OFCCP’s final rule represents the first federal law or regulation expressly prohibiting discrimination on the basis of “sex-based stereotypes.” The final rule prohibits employment decisions based on stereotypes such as how males and females are expected to look, speak, or act.  The final rule provides several examples of actions that “may” be unlawful sex-based stereotype discrimination.  OFCCP is careful to use the term “may,” recognizing that whether a particular behavior is unlawful discrimination requires a fact-specific analysis.

In general, covered employers are prohibited from treating an employee adversely because of that employee’s failure to comply with gender norms and expectations. OFCCP includes a series of examples of actions that may be considered unlawful employment decisions based on sex-based stereotyping.  For example, contractors may not subject a woman to an adverse employment action because of her choice of clothing, including whether or not she wears jewelry, make-up, or high heels.  Similarly, harassment of a man because he is perceived as effeminate is prohibited.  As described above, adverse treatment of employees or applicants because of their actual or perceived gender identity or transgender status is unlawful sex-based stereotyping.

Similarly, the final rule prohibits employers from making employment decisions based on their employees’ caregiver responsibilities. For example, an employer may not fail to offer a female employee overtime hours because of an assumption that she has family caretaking responsibilities and that those responsibilities will interfere with her desire to work the overtime.  Similarly, an employer must not take adverse action against a male employee who is not available to work overtime because he is caring for an elderly parent, if that adverse treatment is based on the sex-based stereotype that men do not have family caregiving responsibilities that affect their availability for work.

Discrimination on the Basis of Pregnancy, Childbirth, or Related Medical Conditions is Prohibited

Under the final rule, employers must treat the following individuals the same for all employment-related purposes: (1) people of childbearing capacity; (2) those affected by pregnancy, childbirth, or related medical conditions; and (3) other persons not so affected but similar in their ability or inability to work. Pregnancy/childbirth related medical conditions are defined in the rule to include lactation; disorders directly related to pregnancy such as preeclampsia, placenta previa, and gestational diabetes; symptoms such as back pain; complications requiring bed rest; and the after effects of a delivery.

The final rule also provides specific examples of unlawful pregnancy discrimination. It is, for example, unlawful to provide an employee with health insurance that does not cover hospitalization and other medical costs for pregnancy, childbirth, or related medical conditions to the same extent that hospitalization and other medical costs are covered for other medical conditions.  OFCCP’s original proposed rule exempted employers from having to pay for health insurance benefits for abortion, “except where the life of the mother would be endangered if the fetus were carried to term, or except where medical complications have arisen from an abortion.”[2]  Following comments in opposition, however, OFCCP removed any reference to abortion in the final rule.  Similarly, although the proposed rule required that employer-provided health insurance cover contraception to the same extent that medical costs are covered for other medical conditions, that requirement was removed from the final rule.

Although complications related to conception are not specifically included in the list of related medical conditions in the final rule, OFCCP notes that employment decisions based on complications related to conception, such as treatment for infertility, may constitute sex discrimination when those decisions are sex specific.

In explaining the prohibition against discrimination on the basis of pregnancy, OFCCP was careful to keep its language gender neutral where possible. For example, recognizing that “some persons who have the physiology necessary to have a chance of becoming pregnant do not identify as women,”[3] OFCCP prohibits contractors from “limiting pregnant employees’ job duties based solely on the fact that they are pregnant, or requiring a doctor’s note in order for a pregnant employee to continue working.”[4]

Provision of Family and Medical Leave Must be Gender Neutral

The final rule sets forth the general principal that, to the extent a contractor provides family, medical, or other leave, such leave may not be denied or provided differently on the basis of gender. The comments to the final rule identify policies offering fewer weeks of “paternity” leave than “maternity” leave as “evidence of discriminatory practices in the provision of family or medical leave.”[5]  Family leave, therefore, must be made available to fathers on the same terms as it is available to mothers.  Contractors must also provide job-guaranteed medical leave for employees’ pregnancy, childbirth, or related medical conditions on the same terms that medical leave is provided for medical conditions that have a similar impact on an employee’s ability to work.

The final rule does not require that employers provide paid leave to their employees.[6]  It does require, however, that if paid leave is provided, it must be provided on the same basis for women as for men.  Moreover, it is OFCCP’s position that the failure to provide a worker who is temporarily unable to work due to pregnancy, childbirth, or related medical conditions with any parental or medical leave at all, or with insufficient leave, may be unlawful if it has an adverse impact on the worker, unless the contractor can show that the failure to provide leave or sufficient leave is job-related and consistent with business necessity.

Relationship to Affirmative Action Policies

In drafting the final rule, OFCCP was cognizant that certain prohibitions on sex discrimination could be read to conflict with contractors’ obligations to undertake good faith efforts to expand employment opportunities for women. Therefore, the new rule states explicitly that “under no circumstances will a contractor’s good faith efforts to comply” with its affirmative action requirements be considered a violation of the final rule.[7]  According to OFCCP, Federal contractors should not interpret the new rule as prohibiting them from using targeted efforts to recruit and advance women to comply with their affirmative action obligations.

For example, as part of their affirmative action requirements, Federal contractors are already required to evaluate their compensation systems to determine whether similarly-situated employees are paid differently based on sex, national origin, or race. The final rule does not create new obligations in that regard, but does provide specific factors that might be relevant to help contractors assess compliance.  The final rule also contains prohibitions against specific sex-based pay practices.  For example, Federal contractors may not deny women an equal opportunity to obtain regular and/or overtime hours.  Similarly, contractors may not grant or deny training, apprenticeships, or other opportunities on the basis of sex.

Sexual Orientation is not Explicitly Covered

During the comment period, OFCCP was urged to add sexual orientation discrimination to the list of types of sex discrimination prohibited by the final rule. Although OFCCP stated that it “supports this view as a matter of policy,” and noted that Executive Orders, Federal agencies, Federal laws and courts have taken steps to prohibit sexual orientation discrimination, OFCCP declined to add that ground explicitly in the final rule.  Recognizing that the EEOC, which OFCCP describes as “the lead Federal agency responsible for administering and enforcing title VII,” has concluded that discrimination based on sexual orientation is prohibited by Title VII as one form of sex discrimination, OFCCP states that it will “continue to monitor the developing law” in this area.[8]

Violations and Enforcement

An individual who believes they have been the subject of discrimination prohibited by the final rule has the right to file an individual claim of discrimination or harassment with OFCCP. Although OFCCP generally has not handled individual claims of discrimination or harassment, we have observed an increased willingness by OFCCP to investigate these claims, particularly if they implicate a company policy or practice that impacts other employees.  A contractor found to be in violation “may be liable for make-whole and injunctive relief and subject to suspension, cancellation, termination and debarment of its contract(s) after the opportunity for a hearing.”[9]

Moreover, OFCCP will likely focus on these additional nondiscrimination obligations during compliance audits. Particularly during the on-site phase of compliance investigations, OFCCP compliance officers may also look for opportunities to identify and remedy class-wide claims for violations of the final rule.  The agency’s standards for class claims and relief are substantially less rigorous than those that apply to class actions in federal court.

Advice to Employers

Included in the final rule are a series of contractor “best practices.” Although they are not mandatory, they are recommended as a means of ensuring compliance with various aspects of the final rule.  The recommended best practices include:

  • Avoiding the use of gender-specific job titles such as “foreman” or “lineman” where gender-neutral alternatives are available;
  • Designating single-user restrooms, changing rooms, showers, or similar single-user facilities as sex-neutral;
  • Providing, as part of their broader accommodations policies, light duty, modified job duties or assignments, or other reasonable accommodations to employees who are unable to perform some of their job duties because of pregnancy, childbirth, or related medical conditions;
  • Providing appropriate time off and flexible workplace policies for men and women;
  • Encouraging men and women equally to engage in caregiving-related activities;
  • Fostering a climate in which women are not assumed to be more likely to provide family care than men; and
  • Fostering an environment in which all employees feel safe, welcome, and treated fairly, by developing and implementing procedures to ensure that employees are not harassed because of sex. Examples of such procedures include:
    • Communicating to all personnel that harassing conduct will not be tolerated;
    • Providing anti-harassment training to all personnel; and
    • Establishing and implementing procedures for handling and resolving complaints about harassment and intimidation based on sex.[10] For instance, OFCCP may view the following decisions and behaviors of managers as sex-based stereotyping:
    • In addition, Federal contractors who offer health insurance should review their plans for categorical exclusions, which may be deemed facially discriminatory under the final rule. Covered employers are also advised to pay particular attention to actions and decisions that can be considered sex-based stereotyping. Employers’ training programs should explicitly address the more subtle forms of discrimination, which may run counter to managers’ attempts to, in their view, “do the right thing.”
  • Deciding not to assign a project involving travel to a pregnant employee, even though the employee has not identified any travel restriction;
  • Asking an unmarried worker without children to handle an emergency project because he or she does not want to inconvenience other workers who are married or have children;
  • Declining to assign an employee to a particular client or account because the employee does not have “the right look” or may not be able to “connect” because of his or her clothing style or gender affiliation; and
  • Changing work hours or locations (e.g., telecommuting) only for employees who are pregnant or have children.

OFCCP’s final rule may provide fodder for an increase in discrimination charges. In preparation, employers should review their policies to make sure they are non-discriminatory and gender neutral.  In addition, Federal contractors should be prepared for OFCCP Compliance Officers to focus on compliance issues related to the final rule during desk audits and onsite visits.

[1] Final Rule Regarding Discrimination on the Basis of Sex, 81 Fed. Reg. 39,108, 39,123 (June 15, 2016).

[2] Discrimination on the Basis of Sex, 81 Fed. Reg. at 39,129.

[3] Discrimination on the Basis of Sex, 81 Fed. Reg. at 39,131.

[4] Discrimination on the Basis of Sex, 81 Fed. Reg. at 39,168.

[5] Discrimination on the Basis of Sex, 81 Fed. Reg. at 39,114-15.

[6] As we recently reported the Obama administration plans to issue a Final Rule implementing the Establishing Paid Sick Leave for Contractors Executive Order (the “EPSL”) by September 2016.  The EPSL requires federal contractors to provide up to 56 hours (7 days) of paid sick leave per year to their employees on new contracts entered into after January 1, 2017.

[7] Discrimination on the Basis of Sex, 81 Fed. Reg. at 39,167.

[8] Discrimination on the Basis of Sex, 81 Fed. Reg. at 39,120.

[9] Discrimination on the Basis of Sex, 81 Fed. Reg. at 39,109.

[10] Discrimination on the Basis of Sex, 81 Fed. Reg. at 39,169.

Obama Administration Publishes Spring Agency Rule List Highlighting Key Dates For Final Publication of Controversial Regulations

Posted in Department of Labor

The Obama administration has released its Spring Agency Rule List.  The list provides updates on the priorities of the Obama administration as it relates to pending rules and regulations.  The agenda notes that the Obama administration aims to issue the Final Rule implementing the Fair Pay and Safe Workplaces Executive Order (the “Order”) by August 2016.  This is a change from the previous agenda which projected to release the Final Rule by July 2016.  The Order imposes additional disclosure and compliance obligations on federal government contractors with contracts valued at $500,000 or more, including requiring contractors to disclose violations of numerous labor, employment, wage payment and safety laws during the contract bidding and renewal process.  Our previous blog posts on the Order and proposed regulations can be found here, here, here, and here.

Also of note in the list is the Obama administration’s plan to issue a Final Rule implementing the Establishing Paid Sick Leave for Contractors Executive Order (the “EPSL”) by September 2016.  The EPSL requires federal contractors to provide up to 56 hours (7 days) of paid sick leave per year to their employees on new contracts entered into after January 1, 2017.  Given that the notice and comment period for the proposed rule implementing the EPSL closed on April 12, 2016, the goal to issue a Final Rule by September 2016 demonstrates the Obama administration’s motivation to implement these new regulations prior to the election of the next president.  Our previous blog posts on the EPSL can be found here, here, and here.